New England Insurance Company v. The Brig Sarah Ann - 38 U.S. 387 (1839)
U.S. Supreme Court
New England Insurance Company v. The Brig Sarah Ann, 38 U.S. 13 Pet. 387 387 (1839)
New England Insurance Company v. The Brig Sarah Ann
38 U.S. (13 Pet.) 387
APPEAL FROM THE CIRCUIT COURT OF THE UNITED
STATES FOR THE DISTRICT OF MASSACHUSETTS
The right of the master to sell a vessel stranded depends on the circumstances under which it is done to justify it. The master must act in good faith and exercise his best discretion for the benefit of all concerned, and a sale can only be made on the compulsion of a necessity, to be determined in each case by the actual peril to which the vessel is exposed, and from which it is probable, in the opinion of persons competent to judge, the vessel cannot be saved. This is an extreme necessity.
The true criterion for determining the authority of the master to sell a vessel stranded near a foreign port, or in a port of the United States, or of a different state than that to which the vessel belongs or in which the owners may be or reside, when the necessity occurs, is the distance of the owners or insurers from the scene of stranding. If by the ordinary means to convey intelligence of the situation of the vessel, the master can obtain directions as to what he should do, he should resort to those means. But if the peril is such that there is a probability of loss, and it is made more hazardous by every day's delay, the master may act promptly to save something for the benefit of all concerned, though but little can be saved. There is no way of doing so more effectual than by exposing the vessel to sale, by which the enterprise of such men is brought into competition as are accustomed to encounter such risks, and who know from experience how to estimate the probable profits of such adventures.
The power of the master to sell the hull of the stranded vessel exists also as to her rigging and sails, which he may have stripped from her, after unsuccessful efforts to get her afloat, or when the vessel in his own judgment and that of those competent to form an opinion and to advise, cannot be delivered from her peril.
If the master sells without good faith or without a sound discretion, the owner may, against the purchaser, assert his right of property in the sails and rigging, as he may in the case of a stranded vessel, which has been sold without good faith in the master.
The Court does not think the case of Smith v. Briddle, 2 Washington C.C. 150, sound law. It is expressed in terms too broad.
In September, 1834, in the District Court of the United States for the District of Massachusetts, the New England Insurance Company filed a libel stating that they were the true owners of the brig Sarah Ann, then in the District of Massachusetts, and in the possession of Obadiah Woodbury and others, claiming to be the owners of the said brig, and who are about to carry her to sea without the consent of the libellants.
A summons was issued to Obadiah Woodbury and others commanding them to appear and show cause why process should not issue against the brig as prayed for in the libel, and they appeared and gave stipulations to abide by the final decree of the court on an appeal, and put in an answer to the libel.
The case was proceeded in by the libellants, and the respondents in the district court, and after testimony had been taken to the matters in controversy, a pro forma decree for the respondents dismissing the libel was given by the district judge by the consent of the counsel of both parties, and the libellants appealed to the Circuit Court of the United States for the District of Massachusetts.
Further evidence was taken in the circuit court by the appellants, and the defendants, and at May term, 1835, the circuit court
gave a decree in favor of the defendants, from which the New England Insurance Company prosecuted this appeal.
The facts of the case were as follow:
On the first day of March, 1828, the appellants, at Boston, underwrote a policy of insurance on the brig Sarah Ann, valued at four thousand dollars, in port, and at sea, during the term of one year, from 22 February, 1828. On 25 March, 1828, the brig was stranded on the shore of the Island of Nantucket, and on the following day an abandonment was made by the owners for a total loss by the perils of the sea. The abandonment was expressly refused by the assurers, but it was not withdrawn by the owners of the vessel, and on the third of October, 1828, a compromise was made between them and the assurers, and all the right and title of the assurers in the brig was assigned to the appellants. The claimants of the brig, the appellees, asserted a title derived under a sale made by the master after the stranding, on the ground of an absolute necessity for such a sale.
In May, 1828, the brig was brought into Boston after having been gotten off from the shore at Nantucket and having been repaired. The repairs of the brig, and her cost at the sale made by the master, amounted to twenty-four hundred and ninety-four dollars and sixty-seven cents, and she was sold in Boston in July, 1828, for $2,736.41. On 14 May, 1828, the president of the Insurance Company wrote to the agent of the former owners of the brig, the assured, stating that the brig was then in Boston, and saying,
"As she is now within your own control as agent for the owners, if you do not take possession of her in their behalf, the Company must consider the sale of her at Nantucket, as affirmed by them, and that she is sold for their account. We of course shall contest the validity of the sale as it regards ourselves, and we think the owners ought to contest it themselves."
At this time, the title to the brig was in contest between the assured and the assurers. The abandonment was denied to be good, and neither party was in a situation to assert a title without compromitting rights then actually in contestation. There were no allegations or proofs in the cause that after the final acceptance of the abandonment in October, 1828, the brig had been within the ports of Massachusetts, and within the reach of the process of the court for a reasonable time, within the knowledge of the appellants.
The facts of the case, as stated in the protest and as detailed in the decree of Mr. Justice Story in the circuit court, 2 Sumner 213, were:
"The brig, having on board a cargo of rice and cotton, sailed on a voyage from Savannah for Boston, and on 23 March, 1828, was stranded on the southwest side of the Island of Nantucket. On the next day, assistance was obtained from the shore, and the anchors were got out and hove tight in order to start the vessel, but without success. In the course of the forenoon, the wreck master came on board with twenty men, and pursuant to his directions the deck load was thrown overboard. They then hove
the cables again, but with no beneficial effect. They then proceeded to open the hatches and discharge the cargo from the hold, and then hove out the cables again, but to no purpose, as the tide had fallen, and there was a considerable surf rolling in shore."
The captain and crew remained on board that night, and the day following nothing could be done, as the wind blew strong at the southeast, and there was a heavy surf. After the weather moderated, the cargo was, with great difficulty, got on shore. The protest stated that the wind and the surf of the sea had driven the brig so far on shore as to render it impossible to get her off.
It further appeared from the evidence that the place where the brig was stranded was on a sandy beach, about twelve miles distant by sea and six miles by land from the Town of Nantucket, and that the brig was at no time high and dry there. The depth of the water about her varied; sometimes it was six feet and sometimes it was ten feet, and she was at no time of tide out of water. The cargo was discharged in about five days, and the spars, sails, and rigging were then stripped off and carried on shore and sold in small lots to the highest bidder. After the cargo was sold, the brig became loose in the sand and slewed round and lay with her broadside to the shore. She was sold on the 28th of March by the master at public auction, where she lay, for $127; at the same time, the spars, sails, and rigging were sold for $422.40. No efforts appeared to have been made to get the brig off the shore, though she had not then sustained any serious injury. Three intelligent surveyors, at a subsequent period, estimated the repairs of her hull, as not exceeding $492.25. The brig was got off by the purchasers soon after the sale, and was carried to the port of Nantucket, and there repaired. The whole cost of the brig to the purchasers including the repairs, and outfits to Boston, was represented to have been, $2,494.67, and she was sold under the order of the purchasers, as stated, at Boston, in July, 1828, for $2,736.41.
MR. JUSTICE WAYNE delivered the opinion of the Court.:
This is an appeal from the Circuit Court of the United States for the District of Massachusetts, and has been submitted to this Court on the printed arguments of the counsel for the libellants and respondents. Those arguments so entirely occupy the grounds relied upon in support of the respective rights of the parties, and the case has been so fully considered in the court below, as it is reported in 2 Sumner 206, that this Court has little left for it to do than to announce its opinion upon the points it deems material for its decision. This will be done briefly. The particular case will be better understood and settled, by inquiring what is the right of the master to sell a ship in the event of an admitted stranding? This involves the necessity for a sale, in the circumstances under which it is done, to make it justifiable in the master or otherwise. All will agree that the master must act in good faith, exercise his best discretion for the benefit of all concerned, and that it can only be done upon the compulsion of a necessity, to be determined in each case by the actual and impending peril to which the vessel is exposed, from which it is probable, in the opinion of persons competent to judge, that the vessel cannot be saved. This is, as it is decided in some of the English courts, an extreme necessity. The master must have the best information which can be got, and must act with the most pure good faith. So says Lord Ellenborough in Hayman v. Molton, 5 Esp. 65. It is also properly termed a moral necessity, because when the peril and information concur, as we have just stated, it then becomes an "urgent duty upon the master to sell for the preservation of the interest of all concerned." It should not be termed a legal necessity, as it is in the argument of the counsel for the libellants, for though the necessity, information, and good faith
of the master will make the sale legal, the term legal is not descriptive of the prerequisite upon which the master's right to sell depends.
Nor can the necessity for a sale be denied when the peril, in the opinions of those capable of forming a judgment, make a loss probable, though the vessel may in a short time afterwards be got off and put afloat. It is true the opinion or judgment of competent persons may be falsified by the event, and that their judgment may be shown to have been erroneous by the better knowledge of other persons, showing it was probable the vessel could have been extricated from her peril, without great injury or incurring great expense, and the master's incompetency to form a judgment or to act with a proper discretion in the case, may be shown. But from the mere fact of the vessel's having been extricated from her peril, no presumption can be raised of the master's incompetency or of that of his advisers. It is right also to test the peril in which the vessel may be, by information of the locality where she is stranded, by the season of the year and by a comparison of the number of vessels lost or saved, which have been driven on the same beach or shoal. But in doing so, though it shall be found that a larger number of vessels stranded have been got off than were lost on the same beach; it is very difficult in a case of stranding upon a shifting beach of sand, with the wind blowing hard on shore, and in a month when the winds are usually strong and stormy, to disprove the necessity for the master to sell, by what may have happened in other cases. The evidence taken in this case establishes that five to one of the vessels stranded where the Sarah Ann was driven on the beach, have been altogether lost. The evidence in such a case, and under such proof of the loss of vessels there, must be very strong before it can prevail to show that there was no necessity for the master to sell. It must also be proved, in a particular case given, that the means in the master's power, or which he may command from those to get his vessel off, had not been applied, and that there would have been what we shall call, and what ought to be so esteemed, a controlling difference between the value of the vessel, as her condition may be when she is old, and the expense to be incurred in getting her off. Nor will any ascertainment of the cost of repairs subsequent to the extrication of the vessel, raise a presumption against the necessity to sell, whatever may be her condition as to strength, and though she may not be injured in the hull, if the actual and immediate prospective danger menaces a probable total loss. We think such was the Sarah Ann's danger.
The court then having stated its opinion as to what makes an extreme necessity, it follows that it cannot be laid down as a universal rule, that the master's power to sell is limited to cases of extreme necessity in a foreign port, or in a port of the United States of a different state than that to which the vessel belongs, or in which her owners may be or reside when the necessity occurs. The true criterion for determining the occurrence of the master's authority to sell is the inquiry, whether the owners or insurers; when they are not distant
from the scene of stranding, can, by the earliest use of the ordinary means to convey intelligence, be informed of the situation of the vessel in time to direct the master before she will probably be lost.
If there is a probability of loss, and it is made more hazardous by every day's delay, the master may then act promptly, to save something for the benefit of all concerned -- though but little may be saved. There is no way of doing so more effectual than by exposing the vessel to sale, by which the enterprise of such men is brought into competition as are accustomed to encounter such risks, and who know from experience how to estimate the probable profits and losses of such adventures. And we here say that the power of the master to sell the hull of his stranded vessel exists also as to her rigging and sails, which he may have stripped from her, after unsuccessful efforts to get her afloat, or when his vessel, in his own judgment, and that of others competent to form an opinion and to advise, cannot be delivered from her peril. The presumption is that they are injured; they can never again be applied to the use of the vessel, and they must ordinarily become from day to day of less value. In fact they are a part of the vessel when stripped from her, and the mere act of separation by the vigilance and effort of the master, by which they are saved from the ocean, does not take them out of his implied power to sell in a case of necessity. The necessity does not, as has been supposed, mean that no part of her tackle, apparel, or furniture saved shall be sold, because they are no longer liable to loss; but when they are saved, whether a sound discretion does not require them to be sold for the benefit of all concerned.
If, however, the master sells without good faith or without a sound discretion, the owners may, against the purchaser, assert their right of property in the sails and rigging, as they may in any case of a stranded vessel, which has been sold without good faith in the master, with her sails and rigging standing. We do not think the case of Scull v. Briddle, 2 Wash.C.C. 150, notwithstanding our respect for the memory of the eminent judge who made it, sound law. It is expressed in terms too broad. The mischievous consequences apprehended may be controlled in each case by such proof as we are obliged to depend upon to maintain and secure from abuse other interests, equally important to society in general as to individuals engaged in some particular pursuit. We think the interest of owners of vessels in cases of a sale by the master, when pressed to make it by necessity arising from the perils of the sea, is amply protected; and that the power of the master to sell is secured from abuse by the limitations placed upon the exercise of it, and by the obligation of the purchaser at the sale to maintain his ownership against the claim of the original owner, by showing that the necessity for a sale had arisen; that it was made in the good faith and sound discretion of the master. This certainly in the case of such sales, at home, gives to the owners of a stranded vessel a stronger guard against imposition and fraud, than they can have in sales made in a foreign port; and serves to support the correctness
of the opinion that the master's power to sell is not confined to a foreign port, or to a stranding in another state. This doctrine holds out no encouragement to the master to sell, it gives him no facility to sell, when it is not authorized by necessity, clearly made out, and exercised with good faith and sound discretion.
We have decided the two points in the case necessary to a right decision of it. It is unnecessary for the Court to examine other points argued by counsel, though they are in the record, and which it would have been necessary for the Court to consider if the respondent's rights under the sale had not been established by the points decided.
We think the facts in the case, which will appear in the report of the case made by the reporter, show that the master of the Sarah Ann was in that necessity, from her stranding and daily probable loss, to make it proper for him to sell her hull, sails, and rigging for the benefit of all concerned, that the sale was made upon the information and advice of competent judges, aiding his own judgment, and that it was made in good faith and in the exercise of a sound discretion.
The decree of the circuit court is therefore
This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the District of Massachusetts and was argued by counsel. On consideration whereof it is ordered, adjudged, and decreed by this Court that the decree of the said circuit court in this cause be and the same is hereby affirmed with costs.